Cathay Pacific Airways' pledge of allegiance to the oneworld alliance announced yesterday ends more than a year of speculation about its future direction in an increasingly competitive industry. It might explain why the Hong Kong flag carrier's shares jumped 30 cents, or 4.6 per cent yesterday, to $6.75 on a day when the Hang Seng Index took a 3.7 per cent tumble. Antony Tyler, Cathay Pacific's director of corporate development, yesterday said: 'There are things happening in the market that make alliances necessary. 'There is no room for airlines with no particular friends any more,' he said. He said the market was pushing the industry into large alliances. 'There are the frequent-flyer programmes, the seamless service issues and the flight code-sharing arrangements' which have made alliances virtually a necessity, Mr Tyler said. 'A salesman with an alliance could go to a global business and have the scope to capture all of their corporate travel,' Mr Tyler said. 'The alliances are gradually squeezing the independent non-aligned airlines out.' Lehman Brothers Asia analyst Philip Tulk said: 'It's good news, especially over the long-term. 'It will probably allow them to share costs and give Cathay Pacific new revenue opportunities,' he said. News of the alliance has already begun worrying rivals. Yesterday Virgin Atlantic chairman Richard Branson said that 'from a consumers point of view it can't be good news . . . instead of Oneworld, you could say one company.' But other analysts said it was far too early to call the alliance a success. 'The Star alliance is too new to show any real evidence of value to the bottom line of its members,' an analyst said. 'It's still only a joint marketing exercise,' he said.
